The supplier is 40% of your cost of sales. You are 3% of their revenue.

Volume alone does not buy leverage. What decides a supplier negotiation is usually settled long before anyone discusses price.

By Steve 5 min read
Abstract bridge artwork for The supplier is 40% of your cost of sales. You are 3% of their revenue.

The annual letter arrives. Prices up 7% from the first of the month, citing input costs, energy, freight, wages. You push back, you settle at 5%, and everyone treats that as a win. Two things about the exchange are worth noticing. The first is that the supplier opened the conversation. The second is that your negotiating position was fixed months earlier, by decisions nobody thought of as negotiation at all. The number most buyers carry in their head is the supplier’s share of their own spend. It feels like the…

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